Unfortunately most immigrants find out the hard way that they need to build up a good credit history to be able to function properly in our Canadian economy. Having a good credit rating is a must in order to borrow for the purchase of buying a car, house and so on.
A credit rating reflects your ability to take on and pay back money you have borrowed. If you are thinking of buying a house or a car, having a good credit rating will help to secure financing and may get you a better interest rate. Employers and Landlords often use credit rating to help them decide on approving your applications.
Here are a few suggestions to newcomers on how to build a Canadian credit rating.
- Apply for a secured credit card of $1,000 value. This gives you all of the advantages of a credit card, but requires that you set aside money to provide the bank with the security that you will pay the money back. Consider using this credit card to purchase every day things such as groceries. Over time, you can build your credit history and eventually your credit rating should be high enough that you can confidently apply, and be approved for, an unsecured credit card.
- Always pay bills on time and in full. Make sure you are never late or miss a payment on your credit card. If you cannot afford to pay the entire bill, then you must at least make the minimum monthly payment.
- Know what is being said about you. Your credit history is recorded in files maintained by at least one of Canada’s major credit-reporting agencies; Equifax Canada or TransUnion Canada. You should check it periodically (every 3 months or so) regularly to ensure you are on track. Consider signing up for Equifax credit oversight program where they will send you a credit report every 3 months or so showing your credit score. Speak to a mortgage broker such as ourselves for comments on your credit report.